How to Calculate Committed MRR (CMRR)

In a previous post, we looked at the importance of tracking monthly recurring revenue (MRR) for SaaS companies. Tracking various categories of MRR can help entrepreneurs get a read on the overall performance and trends of their company.

If you’re already tracking these metrics, you’re well on your way to adding a more forward-looking metric based on MRR: committed monthly recurring revenue (CMRR).

What is CMRR?

CMRR looks at current MRR, which is defined as (New Business + Expansion – Contraction – Churn), then adds in signed contracts going into production and subtracts out revenue likely to churn within that period.

Why CMRR is important

CMRR is not only useful internally; it is also often used by banks or other lenders as a baseline number in determining how much credit to extend at any given point in time. For example, the amount of revolving credit extended to SaaS companies is often based on a multiple of CMRR. The multiple is often rooted in customer retention rates.

Using CMRR and other customer-oriented SaaS metrics allows the credit line to grow or shrink based on the performance of the company, ensuring that the lender is not taking an outsized risk and your company is not taking on too much debt.

How to calculate CMRR

Here’s a simple formula you can use for determining CMRR:

CMRR = MRR + Signed Contracts – Expected Churn

The example below shows the difference between MRR and CMRR.

Detailed MRR

Customers

CMRR

Customers

Notes

End of Q1

$750,000

100

$750,000

100

New Business

$50,000

1

$50,000

1

New Customer

$40,000

1

$40,000

1

New Customer

$50,000

1

Contract Signed; Not Yet Billed

$40,000

1

Contract Signed; Not Yet Billed

Subtotal

$90,000

2

$180,000

4

Churned

$100,000

-1

$100,000

-1

Lost to Competitor

$20,000

-1

$20,000

-1

No Longer Wants Service

$10,000

-1

$10,000

-1

Lost to Competitor

Subtotal

$130,000

-3

$130,000

-3

Contraction

$5,000

$5,000

Discount on Renewal

$5,000

$5,000

Reducing Users

Subtotal

$10,000

$10,000

Expected Churn

$30,000

-1

Not Returning Calls for Renewal

$10,000

-1

Continuing Technical Issues

Subtotal

$40,000

-2

Expansion

$50,000

$50,000

Increasing Users

$20,000

$20,000

Adding Recurring Service Package

Subtotal

$70,000

$70,000

End of Q2

$770,000

99

$820,000

99

As you can see in this example, CMRR has a more positive outlook than MRR. But there will be cases where CMRR can show a less favorable outlook, especially if expected churn is much higher than new contracts entering production.

Keep track

As with any SaaS metric, there is no one industry definition for measurement. As you begin to track this metric, be sure to document how you’re calculating this number—and remain consistent over time. Having thorough documentation will make it easier when you have to share this metric with potential investors and lenders.

Want More SaaS Metrics?

Want a more comprehensive look at the most important metrics investors look for when funding tech companies? There are many numbers, statistics, and metrics to calculate, track and assess the health of your technology business; so many, in fact, that reliable measurement can seem overwhelming.

This guideexplains the core metrics used to measure SaaS company success. Using simple examples, we’ll show you how to calculate each metric, and describe why specific indicators are important to investors.